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Cultural Differences Affecting Global Human Resource Management

Cultural differences vary from country to country with corresponding differences in HR practices

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Bose Jacob, 12/20/2010

Countrys Culture
Set of values, symbols, beliefs, languages, and norms that guide human behavior within country Learned behavior that develops as individuals grow from childhood to adult Countries are recognizing that they need to understand culture of countries in which they do business

Evolution of Global Business

Not long ago, Mercedes-Benz was still a German company, General Electric was American, and Sony was Japanese Many United States firms such as Coca-Cola, Procter & Gamble, and Texas Instruments do most of their business and employ most of their workers outside the U.S. Many non-U.S. companies make products such as with Toyota American making their cars in Kentucky

Evolution of Global Business

Exporting - Selling abroad retaining foreign agents and distributors Licensing - Organization grants foreign firm right to use intellectual properties Franchising - Parent company grants another firm right to do business in prescribed manner

Evolution of Global Business (Cont.)

Multinational corporation - Firm based in one country and produces goods or provides services in one or more foreign countries Global corporation - Corporate units in countries are integrated to operate as one organization worldwide - Operates as if the entire world were one entity

Global Professional in Human Resources (HRCI)

Strategic international HR management Organizational effectiveness and employee development Global staffing International assignment management Global compensation International employee relations and regulations

Strategic International HRM

SIHRM has three orientations:
The adaptive system imitates local HRM practices The exportive system- replicates the HRM practices in the home country and other facilities. The integrative system- focuses on global integrating while incorporating some local variations.

Global Human Resource Management

Global HR managers develop and work through integrated global human resource management system similar to one they experience domestically

Environment of Global Human Resource Management GLOBAL ENVIRONMENT EXTERNAL ENVIRONMENT

Unions Legal Considerations UNITED STATES

INTERNAL ENVIRONMENT

Society

Technology

Marketing

Operations

Unanticipated Events

Human Resource 1 Management

Economy

Finance

Safety and Health

Competition

Other Functional Areas

Shareholders

Customers

Labor Market

Global Staffing
Types of Global Staff Members Approaches to Global Staffing

Types of Global Staff Members

Expatriate - Employee working in firm who not citizen of country in which firm is located but citizen of country where organization is headquartered Host-country national - Employees nationality same as location of subsidiary Third-country national - Citizen of one country, working in second country, and employed by organization headquartered in third country

Approaches to Global Staffing

Ethnocentric staffing - Companies primarily hire expatriates to staff higherlevel foreign positions Polycentric staffing - When more hostcountry nationals are used throughout the organization, from top to bottom

Approaches to Global Staffing (Cont.)

Regiocentric staffing - Regional groups of subsidiaries reflecting organizations strategy and structure work as a unit Geocentric staffing - Uses worldwide integrated business strategy

The expatriate Manager

LOW
p a r e n t O P E R A T O R

___ ____

Going Native

Heart at home

Dual citizen

High LOW Allegiance to local operator High

Expatriate Selection Stages

Self-selection - Employees determine if they are right for a global assignment (family also) Creating a candidate pool Technical skills assessment Making a mutual decision

Background Investigation
Conducting background investigations is equally, or more, important Differences across cultures and countries often put up barriers to overcome Each country has own laws, customs and procedures for background screenings

Global Human Resource Development

Expatriate Training & Development Continual Development: Online Assistance and Training Repatriation Orientation and Training

Expatriate Preparation and Development Program

Expatriate Preparation and Development

Prior to Departure: Orientation and Training

During Assignment: Continual Development

Near Completion: Repatriation Orientation Training

Language Culture History Local Customs Living Conditions

Expanding Skills Career Planning Home-Country Development

Home Lifestyle Home Workplace Home. Employees

Trends & Innovations: Global E-learning

Globalization has created special need for e-learning Challenges for global e-learning implementation are language and localization issues Companies that want to offer courses in several languages usually turn to translators

Compensation for Host-Country Nationals

Organizations should think globally but act locally Compensation - Normally, it is slightly above prevailing wage rates in the area Variations in laws, living costs, tax policies, and other factors all must be considered

Compensation for Host-Country Nationals (Cont.)

Factors to consider: minimum wage requirements, which often differ from country to country and even from city to city within a country; working time information such as annual holidays, vacation time and pay, paid personal days, standard weekly working hours, probation periods, and overtime restrictions and payments; and hiring and termination rules and regulations covering severance practices

Compensation for Host-Country Nationals (Cont.)

Culture often plays a part in determining compensation North American compensation practices encourage individualism and high performance Continental European programs typically emphasize social responsibility Traditional Japanese approach considers age and company service as primary determinants of compensation

Expatriate Compensation
Cost 3 - 5 times an assignees hostcountry salary per year and more if currency exchange rates become unfavorable Largest expatriate costs include overall remuneration, housing, cost-of-living allowances and physical relocation U.S. citizens living overseas can exclude up to $80,000 of income earned abroad

Expatriate Compensation (Cont.)

Countrys culture can affect compensation People in U.S. derive great status from high pay Nations in large parts of Europe and Asia shun conspicuous wealth In Italy, teamwork is more valued than individual initiative

Global Safety and Health

Important because employees who work in safe environment and enjoy good health more likely to be productive and yield long-term benefits to organization U.S.-based global operations are often safer and healthier than hostcountry operations, but not as safe as similar operations in U.S.

Global Employees and Labor Relations

Unionism maintains much of its strength abroad Foreign unions less adversarial with management

Global Employees and Labor Relations in European Countries

Codetermination, which requires firms to have union or worker representatives on their boards of directors, is very common Laws make it hard to fire workers, so companies are reluctant to hire Generous and lengthy unemployment benefits discourage the jobless from seeking new work

Global Employees and Labor Relations in South American Countries

In countries such as Chile, collective bargaining for textile workers, miners, and carpenters is prohibited Unions are generally allowed only in companies of 25 workers or more. Practice has encouraged businesses to split into small companies to avoid collective bargaining

Global Bribery
Foreign Corrupt Practices Act Law has teeth Not having ability to use bribery as tool of doing business has been costly for American companies

Global Equal Employment Opportunity

Women constitute more than 20% of total expatriate workforce percent of U.S. expatriate managerial workforce Some cultures today will not accept woman as a boss Sexual harassment is global problem Sexual harassment laws differ from country to country

Virtual Teams in Global Environment

Necessity of everyday working life Enable companies to accomplish things more quickly and efficiently

Difficulties that Virtual Teams Confront

Do not feel as connected or committed to team Communication problems directly proportional to number of time zones separating them Language problems